Quote:
Originally Posted by nevergaveitathought
its trying to keep up with inflation
since stocks are denominated in dollars and cents and are considered in relation to the dollar it cant help but be up
if it was denominated in used cars, houses or food or gasoline or even crypto it might well be down since the people behind biden took over
|
Good point. Stocks skyrocketed in places like Venezuela and Zimbabwe when hyperinflation hit, although hopefully we'll never go there.
When one year T-bills yield 0.14% and inflation is 5.4%, like now, what are you going to do with your money? If you sit still you lose 5.26% per year. So you invest in stocks. But what if inflation isn't transitory? What if the Fed has to raise interest rates to 7%? Well it becomes harder to justify high P/E multiples for stocks. So maybe share prices go down. Time will tell.
Dow Jones at record high
